UPDATE: No surprises, but my organization has said that they haven’t budgeted for this provision, and cannot participate. Given this financial disaster of a year, I am not surprised whatsoever. But, I hope my post opened some of your eyes to this possibility and that you had the courage to take action to at least inquire about it. If you did and had some success, or even if you didn’t, let me know!
Holy cannoli! How did I not know of this loan reimbursement possibility until yesterday? The potential for this was too good to not pass on, so here goes:
The CARES Act expires at the end of 2020. Apparently, as of my readings yesterday, there is a portion of that bill that allows employers to contribute up to $5,250 annually to their employees’ students loans. The provision “expands the definition of educational assistance” given to an employee from an employer. If your employer has funds earmarked for existing education assistance or reimbursement plan, then those funds can be used to assist in paying towards the student loans of employees. In essence, the expanded definition of “educational assistance” now includes payments towards your student loans.
EDUCATIONAL ASSISTANCE NOW INCLUDES STUDENT LOANS
From the IRS: “The exclusion applies to the payment by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan incurred by the employee for the education of the employee.” So, my interpretation of this is that the education assistance funds, with this expanded definition, can be paid to you the employee, or directly to your lender. These funds can be used towards your principal or interest.
Fortunately, my employer already offers a loan reimbursement and tuition reimbursement plan, so I’m guessing that this provision will not have my employer rushing to redistribute the funds usually earmarked for tuition reimbursement. Given that my employer is contractually obligated to give the loan reimbursement annually, I am going to push for consideration of them also giving the $3,500 that they offer annually for tuition reimbursement. I’ve sent an email inquiring about this to HR, highlighting the benefits of this, and will update this post as I find out more. I mean, what do I have to lose? Oh yes, the possibility of $3,500 paid towards my student loans, tax-free.
With just a few weeks left in 2020 (“Thank Goodness” I can hear many thinking), you should consider digging a little deeper into this opportunity and seeing if it applies to you. If so, take action to see if it has just been overlooked by your employer. Given the financial climate, I suggest you be cautiously optimistic, as I don’t see that many employers would jump at the opportunity to allocate out more money. But, you never know unless you try, and there is the potential for $3,500 tax-free dollars to reward your efforts.
DISCLAIMERS: 1) The views expressed here are my own and do not necessarily represent the views of my employer. 2) There are no conflicts of interest to report. 3) I don’t know what I don’t know, so feel free to message me if you don’t agree with something that you read.
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